Corrected entry: Nothing was explained where super-villains go when the superheroes were retired. Presumably the government could not just herd them up with the heroes - if it could, the government have just used the same technique to arrest them all for being villains. It is a very bad plot hole because, if there had been other villains around, Syndrome could have fought them to gain recognition as a hero rather than devising his evil plot.
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Correction: Realize first that it's been about 20 years, counting the trials, since the superheroes have been allowed to save people. So, guys like Bomb Voyage may have retired for various reasons (no challenge anymore, too old, etc.). Also, some of them are dead, again for various reasons (showdowns with the government, rogue heroes that didn't listen to the government, etc.). Also, we don't know that Syndrome tested his Omnidroids exclusively on heroes; he may have "hired" a few villains for the project. Finally, guys like the Underminer and anyone else that would emerge were probably too young to become villains when all of the trouble started at the beginning of the film.
This seems all strangely convenient. Superheroes pop up, super villains do too. Then super heroes disappear and the super villains disappear too? I don't think so.
lionhead